Canada's Good Idea: A Free-trade Zone With U.s.

OTTAWA — Canada is asking for negotiations on a free-trade zone with the United States. Few in the United States have paid attention, but it is an enormous issue here.

It is a remarkable shift for a country touchy about its sovereignty and its national identity. Opponents argue nationalism as the key reason to maintain protection. Canada would risk being swallowed and homogenized by the United States, they say.

But advocates turn the same argument around. The idea of abandoning barriers in return for access to the vast U.S. market shows that Canada has gained confidence in the sturdiness of its sovereignty and political will, in their view. They feel Canada can compete, and therefore benefit, not only in terms of industry but also in terms of retaining its own self-consciousness.

Canadian-U.S. relations are a special case in the world, of course, with the long, undefended border and the history of amity. Nonetheless, a free exchange in practically all goods and services would be an important shift in international affairs, a reflection of the way economics is leaping frontiers and tying countries together willy-nilly, despite their myriad arguments.

One part of the controversy here is whether a bilateral agreement would spur or undermine the larger efforts to open up world trade on a multilateral basis. It would be permissible under a special

clause in the GATT accord, allowing countries to wipe out barriers between themselves that the rest of the trading community insists on keeping.

At a time when the clamor for protectionism is rising almost everywhere, it could provide a vital push in the opposite direction. This would be particularly true in setting the precedent for including services, something the United States has sought from GATT for a long time with no success so far. Third World countries, with India and Brazil in the lead, do not want to open competition in financial, communications and other services as they do with certain manufacturers because the advanced countries do have an edge. But this is a stand that can't be held indefinitely without harming all trade.

It is exactly the shift of traditional industries to some rapidly developing countries that is forcing already-industrialized nations to turn more and more to service-based economies. Without a trade-off allowing them to supply their better organized service industries to the world market, they aren't likely to keep their home markets open to the flow of competing goods from low-wage producers.

Canada is taking the lead because 30 percent of its national products are export-related, giving it a huge stake in an enlarged market, and 75 percent of its exports go to the United States The two nations are far and away each other's largest trading partner.

So far, the United States has been rather indifferent to the Canadian initiative. The administration and Congress have other priorities. Canadian officials seem to be understanding, if disappointed, that their extraordinary gesture hasn't provoked more immediate interest. But they are pressing their point and Washington should bestir itself because this is an opportunity to move the world in the direction of U.S. principles and openness of many kinds. People in Canada's capital have an interesting double image of their nation's standing in the world. On one hand, they feel themselves a rather small power compared with the U.S. colossus, despite their vast territory. But they also feel they have global interests and an important role on the grand scene, because they face the Atlantic and the Pacific, because they are in NATO and the British Commonwealth and the French-speaking group of states.

They want to take a strong part in promoting peace, political stability, development and prosperity. Offering free trade with the United States is an imaginative and practical proposal to push things along in the way they must ultimately go.